Associate In Insurance (AINS) 103 Practice Exam

What may happen if misrepresentation or concealment occurs while obtaining a policy?

The insurer may rescind or cancel the policy, deny claims, or pursue fraud; coverage could be void from inception. The policy is automatically renewed. The policy premium is discounted. There are no consequences.

Correct Answer:

The insurer may rescind or cancel the policy, deny claims, or pursue fraud; coverage could be void from inception.

Explanation:

Misrepresentation or concealment happens when the applicant provides false information or hides a material fact that matters to underwriting. If the misrepresented or concealed fact is material—meaning it would have changed how the policy was issued—the insurer has remedies that can affect the entire contract. The insurer may rescind the policy, treating it as though it never existed, or cancel it. They can also deny a claim that relates to the misrepresented risk, and in cases of fraud, pursue fraud charges. Because of this, coverage could be void from inception. The other options don’t fit how misrepresentation is treated: misrepresentation doesn’t automatically renew or cause a premium discount, and there are real consequences when material facts are misrepresented.

Access more questions from this quiz

Continue to Associate in Insurance (AINS) 103 Practice Exam for more practice questions and the full quiz experience.

Access More Questions